Patient capital delivers results
Cambridge Innovation Capital adds value to university and city's business success story
Exactly how do the university’s activities intersect with Silicon Fen to deliver The Cambridge Phenomenon?
The elegant nature of the jigsaw puzzle that results in so many world-beating ideas being developed in the city becomes more explicable when the activities of Cambridge Innovation Capital (CIC) are factored in.
Cambridge Innovation Capital was formed in 2013 as a venture capital firm investment fund that specialises in high-growth technology companies, most notably in healthcare and technology. It has invested in companies including Bicycle Therapeutics, CMR Surgical, Audio Analytic, Origami Energy, Cytora, GeoSpock and Abcodia.
To help assess the intriguing – and unique – financial architecture are investment director Andrew Williamson and head of investor relations and communications, Louise Rich.
“We are an individual fund with a number of shareholders, the largest of whom is the university,” says Louise from CIC’s base at the Hauser Forum. CIC evolved from Cambridge Enterprise, the university’s “knowledge and technology transfer service”.
“The Hauser Forum houses Cambridge Enterprise, the commercialisation arm of the university, which is a wholly owned subsidiary of the university,” Louise adds. “The management of Cambridge Enterprise thought: ‘There are lots of seed fund opportunities in the cluster but not so many doing follow-on funding.’”
As an initiative of the university, the connections remain close.
“The university gets shares from two different sources – from having the idea and as institutional shareholders,” says Louise. “On top of that we are a referee investor for the university and we have rights of first refusal for spin-outs from the university.”
“Cambridge Enterprise provides the seed funding,” adds Andrew. “We have the opportunity to fund and to provide additional growth capital. In fact we’re both physically located in this building and we meet on a daily basis.
“We have a portfolio of 22 companies five years after foundation. Eleven are from the university, the other 11 are from the cluster.”
“It’s 50 per cent healthcare and 50 per cent technology,” notes Louise, who qualified as a chartered accountant with PwC and has an MA in natural sciences from the University of Cambridge.
She was head of investor relations for FTSE firms before joining CIC in 2015.
Andrew joined CIC as investment director specialising in technology in 2016, thereby completing a Cambridge loop which began with an MA in natural sciences and a PhD in physics before leading across the Atlantic. For 10 years he was leading materials science and semiconductor research in US government research laboratories. Then came managing director roles at Physic Ventures in San Francisco and MalibuIQ in Los Angeles. He joined CIC from True North Venture Partners in Chicago where he was a partner in its $300m venture fund.
So is it valid to consider Cambridge as a developing Silicon Valley cluster?
“What Cambridge has done for centuries is to be at the forefront of academic research,” replies Andrew. “In the last 10 or 15 years this has impacted on the commercial world. The R&D here is as good as, if not better than, Silicon Valley, which is really heartening.
“Cambridge is science and engineering-rich compared to Silicon Valley, which also does a lot of deep tech but is also involved in consumer markets, and fintech. However, Silicon Valley grew up over 30 or 40 years and we’re 15 years into that… I don’t think the cluster is yet mature.”
CIC’s activities are geared towards catering for the investment needs of the cluster over the longer term.
“The traditional model for the development of a company involves a 10-year time period,” says Louise. “Founding Cambridge Innovation Capital is very much part of that ambition, so if it takes 10 years to get going we should invest for that time.”
“Cambridge Innovation Capital is one of a new generation of funds that go under the moniker ‘patient capital’,” adds Andrew.
The most-used route sees CIC invest and take a seat on the board.
“With Bicycle Therapeutics, we have Michael Anstey (CIC’s investment director specialising in healthcare) on the board. With Prowler.io, we led a Series A investment round last summer and as part of that I joined the board.
“At CMR Surgical, which is managed by our life sciences team – their team is growing very rapidly and they’re building a custom facility – Rob Tansley is a member of the board and is intimately involved there.
“With Audio Analytic, which is on the intersection of the Internet of Things and smart homes, I’m on the board there… we’re very active.”
CIC employs just 10 people. Its advisors include luminaries such as Sir Greg Winter, Charles Cotton and Jonathan Milner. Mike Muller, one of the founders of Arm, is on the board with CEO Victor Christou.
It’s stellar stuff but the team’s feet are firmly on the ground.
Andrew says entrepreneurship in Cambridge is “very much word of mouth so we hope when an entrepreneur is setting up they’ll think of us”. The team is always on the lookout and identifies new talents and developments early. For instance, a lot of Arm employees got rich when the firm was sold to Softbank in 2016, and some have started their own firms. No names are in the mix yet, but it’s very much ‘watch this space’.
“The money comes in, it creates wealth, new businesses are started, it’s a virtuous circle,” is how Andrew puts it. This circle, he believes, will also hold true now that Amazon, Apple and Microsoft have a presence in the city. “One of the differences today from five years ago was the lack of multinational corporations – I welcome them.” But it’s the home-grown business that CIC invests in.
These include recently backing AI insurance tech company Cytora – “a company in the emerging insuretech field” – as part of a £4.4million funding round. Cytora, founded in 2014, emerged from Cambridge Judge Business School.
The investment in Origami Energy, “a software platform for people with energy assets” which was founded in 2013, is described as “a landmark moment” and “very close to my heart as I spent 20 years in cleantech and solar”.
It’s five years after being founded, and already Cambridge Innovation Capital is multiplying the value of the ecosystem to make it more profitable and more resilient.
How did the cluster manage without them?
Innovations and Innovators
This article forms part of the Cambridge Independent’s Innovations and Innovators series, published in assocation with Ensors, Nuffield Health, Cambridge Innovation Park and Hilton City Centre Hotel. Other articles in the series include: